Apple settles with FTC over in-app purchases

Apple has reached a $32.5 million settlement with the Federal Trade Commission over unauthorized purchases made within smartphone and tablet apps.

The settlement requires Apple — maker of the iPad and iPhone — to offer full refunds "for any charges by a minor that are unauthorized," FTC Chairwoman Edith Ramirez said at a press conference Wednesday.

The deal also mandates Apple update its billing practices to ensure it has express consent from users before charging them for content within apps.

"This settlement is a victory for consumers harmed by Apple's unfair billing, and a signal to the business community: Whether you're doing business in the mobile arena or the mall down the street, fundamental consumer protections apply," Ramirez said.

The deal stems from purchases made within apps by kids using a smartphone or tablet. In most cases, the purchases are racked up without their parents' consent.

Many mobile games and apps offer items such as in-game currency that users can buy from within the app instead of Apple's App Store. The price of these in-app purchases range from 99 cents to $100.

Ramirez cites the example of one consumer whose daughter spent $2,600 on in-app purchases from the game Tap Pet Hotel.

The FTC complaint also claims Apple does not inform consumers of a 15-minute window opened after a user enters that password that allows for unlimited purchases on the App Store or within apps.

In an employee memo obtained by several tech sites, including Re/code, Apple CEO Tim Cook said e-mail was sent last year to 28 million App Store customers, and refunds were sent to settle 37,000 claims.

"It doesn't feel right for the FTC to sue over a case that had already been settled," Cook wrote in the memo. "To us, it smacked of double jeopardy. However, the consent decree the FTC proposed does not require us to do anything we weren't already going to do, so we decided to accept it rather than take on a long and distracting legal fight."